Political backlash against the economic reform package, which also includes cuts fuel subsidies, presented by the Cabinet last week has left Prime Minister Manmohan Singh's coalition scrambling to shore up its support and prevent early elections.

Protest: Indian policemen try to remove a burning effigy representing the Indian government during a protest along railway tracks in Allahabad today

Some government allies have joined opposition parties in supporting the protests, which closed many schools and kept commercial trucks off the roads. In some states, such as opposition-ruled Gujarat, the strike was widely followed.

In other regions, including the main cities of New Delhi and Mumbai, the impact of the protests was scattered.

Nevertheless, the Confederation of Indian Industry estimated the country might have lost as much as £1.42 billion ($2.3 billion) in production and trade.

In a signal that the government was on shaky ground, many of the protests in Uttar Pradesh state were led by the Samajwadi Party, which has been supporting the government from outside the fragile ruling coalition.

Not welcome: The sign held up by a Samajwadi Party activist during the daylong strike against the retail reforms reads 'Go back Wal-Mart'

The party, which has been extremely
critical of the reform package, postponed a meeting it had called for
Thursday evening to determine its next step. Top ministers downplayed any talk of a teetering government.

'We have enough friends today, we had enough friends yesterday ... so I don't see any reason why you should doubt our stability,' Finance Minister Palaniappan Chidambaram told reporters.

In Uttar Pradesh and Bihar, protesters blocked railroad tracks. Some held up placards reading 'Go back Wal-Mart,' a reference to the U.S. retail giant expected to enter the Indian market under the new regulations.

The region of Jammu, an opposition stronghold, was mostly shut and in central Delhi, thousands joined protests demanding the government back down.

Anti-government: Activists of Telugu Desam Party (TDP) carry a caricature of Prime Minister Manmohan Singh with the words 'The blood suckers are not human beings but devils' during a protest at a bus station in Hyderabad

Law Minister Salman Khurshid said the protesters were only hurting the economy they claimed to be defending.

'I think they've shown their point, they've given their point of view, they've shown their protest,' he said.

'Now let us get back to work, back to our factories, back to our shops, back to our offices, schools and colleges.'

Singh, who came under intense criticism in recent months for presiding over a corrupt and paralyzed government, stunned the country with last week's raft of reforms. The government announced a reduction in massive subsidies for diesel fuel and cooking gas.

Refusal: Daily wage laborers in New Dehli lay on loaded handcarts during today's nationwide strike against the Indian government's proposals

Across the nation: An Indian man sleeps on a handcart in front of closed shops in Gauhati during the strike which saw schools and shops closed all over India

It also opened up the country's
enormous retail sector to foreign competitors, allowed local airlines to
sell stakes to foreign carriers and pledged to sell off chunks of four
state-run companies.

'It's a very difficult decision for the government," Information Minister Ambika Soni said.

'We have tried to assure everybody that there was no other way except to take that decision to keep the economy on track.'

Opponents said the fuel hike would spark higher inflation and hurt the country's poor. They said opening up the retail sector to foreign giants would crush the nation's millions of small retail shops.

'India is heading toward economic slavery,' Rajnath Singh, a leader of the opposition Bharatiya Janata Party, said during a protest Thursday. He warned that the entry of Tesco and Wal-Mart would flood India with Chinese-made goods, hurting local farmers, manufacturers and retailers.

The Trinamool Congress party announced it would pull out of the coalition Friday unless the economic package was withdrawn, leaving the ruling Congress party a few remaining hours to try to win it back. However, Chidambaram, the finance minister, said the reforms would stand.

If the Trinamool Congress pulled out, India would be left with a minority government dependent on the outside support of either the Samajwadi Party or the Bahujan Samaj Party. The BSP said it would not decide until next month what action to take.

Government officials said they remained confident the government would survive until the next scheduled elections in 2014.